Last September Silvercorp Metals Inc. tried to turn the tables on short-sellers who bad-mouthed the company’s stock by teaming up with K&L Gates and filing a defamation suit.

On Aug. 16, Manhattan Supreme Court Justice Carol Edmead (See Profile) dismissed Silvercorp’s suit, finding that the researchers and anonymous investors that raised questions about the mining company’s accounting and business practices last year represented nonactionable opinion.

More ominously for Silvercorp and other companies targeted by muckraking short-sellers, Edmead acknowledged that the ruling may embolden others to follow in the defendants’ footsteps.

“The court recognizes that this result could be viewed as a green light to those who could use this kind of vehicle to manipulate the market,” Edmead wrote in Silvercorp Metals v. Anthion Management, 150374/2011. “However, the Court is constrained to conclude that the challenged statements fail to support a claim of defamation.”

One of the defendants, Alfredlittle.com blogger and researcher Jon Carnes, certainly seems to be taking the ruling as an invitation to dig up even more dirt on Silvercorp and other companies. Carnes, who admits openly to shorting the companies he writes about, crowed on his blog that Edmead’s ruling was a victory for free speech, and he noted that Silvercorp was the only U.S. listed Chinese company he’s accused of possible fraud that wasn’t subsequently de-listed or subject to halted trading. “My efforts are now focused on Silvercorp,” he vowed.

Vancouver-based Silvercorp, which mainly operates mines in China, came under scrutiny last fall from Carnes and other investors, including the $1 billion Manhattan hedge fund Anthion Management. In letters to regulators and online postings, the investors questioned whether Silvercorp had engaged in fraudulent accounting and overvalued its assets.

Silvercorp’s defamation suit named Chinastockwatch.com, Alfredlittle.com, their editors and publishers, and five John Doe defendants, accusing them of disseminating false claims that sent Silvercorp’s shares into a downward spiral. One of the John Does revealed itself to be Anthion when the fund hired Akin Gump Strauss Hauer & Feld to file a countersuit, which Edmead dismissed last month.

Anthion’s lawyers at Akin Gump and counsel for Alfredlittle.com and related defendants at Eaton & Van Winkle moved to dismiss the defamation suit in March. They argued in separate motions that their statements about Silvercorp amounted to protected speech. Edmead agreed in her Aug. 16 ruling.

“I think this is an important decision that reaffirms the rights of market participants to express their opinions of public companies, said Anthion counsel Douglass Maynard of Akin Gump. “This decision protects free debate about public companies and their values.”

Silvercorp counsel Stephen Crimmins of K&L Gates didn’t return a call for comment. Silvercorp filed a notice of appeal a day after Edmead granted the motions to dismiss.